Laws & Legal Compliances for Companies selling Hand Sanitizers in India: Lawyers Advice on Corporate Laws of India | Corporate Law Firm in Delhi NCR | Corporate Lawyer in Delhi NCR | Corporate Law Attorney in India

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Due to the outbreak of the COVID-19 disease, India has seen a huge increase in demand for hand sanitisers. While no company should be celebrating the disease in favour of profits gained, there’s no denying that companies distributing hand sanitisers in these times are benefitting a lot from this increase in demand. As a result, the market for hand sanitisers is becoming more and more attractive for new companies to enter.

Considering the consistent recommendations by medical authorities that hand sanitisers with alcohol in them will be the most effective in maintaining hygiene in these times, it’s not surprising that many manufacturers and sellers in India are now producing hand sanitizers containing alcoholic ingredients like ethanol or isopropyl. However, due to this adjustment in the formula, certain regulations and laws need to be respected by companies involved in the distribution.

What is the law governing Hand Sanitisers?
Sanitizers fall under the definition of “drug” as given under Section 2 (b) of the Drugs and Cosmetics Act, 1940. Therefore, the Licensing Authority as prescribed by the Government of India under the Act, will be giving all licenses to sell, manufacture or distribute any sanitizer.

The submission for the sale/ stock/ exhibit or offer for sale has to be made in the prescribed Form provided for, under the DCA, 1940. The licensee has to give the mandatory details and has to follow the rules that come along with the license.

Consumers Cannot Be Misled
A marketer needs to be careful about how they wish to sell their ABHR since they cannot be branding their products as “Hand Sanitizer” and sell it under both a pharmaceutical licence and an ayurvedic license because an ayurvedic drug and a pharmaceutical drug are two very different drugs and the regulatory risks they carry increase, if such a practice is followed.

The law does not want to see any misleading of customers. Hence, a declaration needs to be filed at the time of applying for a drug license if the manufacturer wishes to distribute an ABHR under their brand. The declaration acts an assurance that no other manufacturer is using the brand name under which the drug is wished to be sold, and such a declaration should be made before any license is obtained.

Would emerging hand sanitisers be considered a new drug?
The World Health Organisation (WHO) gave two formulae for use in the production of Alcohol Based Hand Rub (ABHR) and these were first permitted for distribution in India in 2017. These formulae are now specifically followed by most manufacturers and marketers because they are recommended by WHO.

As per the New Drugs and Clinical Trial Rules (NDCTR) that came in 2019, a formula is considered to be a “new drug” for four years from the date of its first approval. Since the Drug Controller General of India (DCGI) first approved these formulae in 2017, they can be considered a “new drug” till 2021.

However, as found in the Madras High Court judgement, given in the case of M/S.Accent Pharma vs The Inspector Of Police (Crl. R. C. No.1642 of 2016), the title of “new drug” carries with it, two fundamental principles it needs to adhere to. First, a permission needs to be obtained beforehand, from the DCGI, in addition to a manufacturing license. Second, after the manufacturing license is given, the manufacturer is bound to take on post-marketing observation and give periodic safety update reports (PSURs) to the DCGI.

Sale of Hand Sanitisers in the name of WHO or Government of India
It can be assumed that if an ABHR is produced with the formulae recommended by the WHO, then it should be carrying the WHO name on its labeling, but it would not be recommended to reap commercial gains from the goodwill attached to the WHO name since the WHO formulae were initially suggested as a substitute in the situation where appropriate commercial products or their ingredients were either unattainable or too expensive.

Similar to the case of WHO, without getting permission from the Central Government beforehand, the name or official seal or emblem of the Government of India or of any State or of a Department of any Government cannot be used, as laid down under the Emblems and Names (Prevention of Improper Use) Act, 1950.

Important rules to consider for labeling: –
• Manufacturers also have the responsibility of giving vital information to consumers before they purchase their sanitizers.
• Given the fact that ABHRs not only contain alcohol, but also contain other ingredients that limit or kill harmful bacteria.
• As per Rule 96 of the Drugs and Cosmetics Rules, 1945, it is compulsory by law to highlight the composition on the label first, after which comes the brand name, and this was reiterated in the Delhi High Court judgement in case of Amit Sahni vs Union of India.
• As per the Drugs and Cosmetics (First Amendment) Rules, 2018, drug manufacturers have to label generic name of drug or fixed dose combination drug at least two font size larger than the brand name.
• It must be clearly mentioned on the label, the fact that the ABHR contains denatured alcohol, the percentage, and that it must be used for external use only, along with safe storage conditions.

In conclusion, given the recent Supreme Court judgement, in the case of Justice for Rights Foundation v. Union of India 2020 (Writ Petition (Civil) Diary No(s).10792/2020), it is clear that Hand Sanitizers are an essential commodity that must be sold at minimum retail prices to combat COVID-19. Therefore, marketers and manufacturers should be alert about the various laws and regulations because any lapse in compliance can result in strict regulatory action.
Authored By: Adv. Anant Sharma & Parinay Gupta